ConservativeHome's The Republican

Unsurprising fact of the day: Small business optimism continues to tank

Natalie Gonnella
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With economic confidence sinking, unemployment soaring, and the country's fiscal future in flux, Gallup's latest poll results detailing the expectations of small business owners comes as no surprise.

According to the latest analysis:

Small-business owners turned less optimistic about future revenues and new hiring even prior to the events of recent weeks and the plunge in economic confidence. The percentage of owners anticipating that their revenues would increase over the next 12 months fell to 42% in July, down from 49% in April and 54% in January. At the same time, 18% expect their revenues to decrease. Small-business-owner revenue expectations are no better now than they were in October 2010.

And when it comes to future hiring expectations:

The percentage of small-business owners expecting the overall number of jobs at their company to increase over the next 12 months also fell in July, to 16% from 19% in April and 23% in January. Simultaneously, 12% of owners expect a decrease in the number of jobs at their companies over the next 12 months. Small-business hiring and firing intentions are now the lowest since this time a year ago.

As Obama claims to be turning his attention to job creation (something the GOP has regularly pursued in both the House and Senate throughout the current congressional term) the full results from Gallup's latest small business survey are available to view here.

Beneath the jobs numbers and questionable economic recovery, there lies a more disquieting question: Is America still a place where it's worth it to work hard to get ahead?

Ryan Streeter
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Is it still the best place on earth for people of all stripes to realize their deepest hopes and aspirations? We never used to pause before answering this question. But trends these days are forcing us to stop and think a little before we answer now.

While the daily commentary on the nature of our post-2008 economic malaise is practically endless, we spend very little time talking about how the nature of America's opportunity environment has changed - even prior to the recession. 

As we look to recover from our current economic stagnation, this deeper question about whether America is still the land of opportunity should be keeping us up at night.

The trends are disquieting.

Fewer people of working age are working. Our employment to population ratio, a measure of how many people of working age are actually working, has grown worse than Europe’s for the first time in history. The ratio was worsening before the recession, and Europe passed us by before the dark days of 2008.

Life below the top 20% is stagnant. America continues to be the aspiration nation for the upper middle class. But what about everyone else? Wages have basically been flat over the past decade. It’s getting harder to say to working and middle class Americans, “Hey, if you work hard, you’ll get ahead.” Getting ahead hasn’t been the experience of a vast number of Americans for quite awhile now. The long-term effects of stagnation are hard to predict, but a loss of aspiration is surely one of them - which is bad for America.

We aren’t creating new businesses like we used to. New and young businesses have driven job creation in America for years. But the rate at which we create new companies has been flat for 20 years, suggesting we’ve peaked in our ability to produce high-growth enterprises. Without increasing our rate of new firm formation, it's unlikely we'll see the kind of job growth our economy needs long term.

The working class is basically self-destructing before our eyes. By just about every measure of socioeconomic health, the lower middle class is falling apart. From higher divorce rates to out-of-wedlock childbearing to detachment from the workforce, the working class - which resembled the upper middle class in just about every measure except income a generation ago - now looks more like what is sometimes unflatteringly called the welfare class. Our image of working class America as the cauldron in which the ingredients of upward mobility are brewed is now outdated.

Young people are taking longer to grow up. This is especially true of men, as Kay Hymowitz has recently detailed in her book, Manning Up. A significant share of men in their twenties live in a strange zone between boyhood and manhood in which they live at home, don’t marry, and bounce around vocationally. And in general, people in their twenties delay marriage more than ever. The net effect is the slow death of the social norm that says people should graduate from high school or college and get about the business of making their own way.

Young people’s poor economic prospects are sowing the seeds of a potential lost generation. While unemployment among college-educated people is low, people in their twenties with college degrees have nevertheless been hit hard by our economically troubled times. Young workers are losing ground economically. They face lower wages, a tattered housing market, and a future colored by interest payments on public debt. We are likely witnessing the rise of a generation that will be worse off than their parents, which has a dampening effect on aspiration and how one views the future.

The American Dream as we’ve defined it for over a generation has been shattered. The American Dream has evolved over time. For everyone alive today, the Dream has essentially been wrapped up in the idea of homeownership, as Walter Russell Mead has recently recounted. The burst of the housing bubble changed all that. The crisis of default and depressed home values that followed has, for the first time most people can remember, refuted the notion that homeownership is the best long-term strategy for building equity. Uncertainty about how to build assets long-term is now pervasive in homes across the country, which dampens people's hopes about the future.

We are losing our affection for the transcendent. Many on the left, and some on the right, won’t think this matters. But by just about every measure, religiosity correlates with all the habits and virtues necessary for upward mobility. For this reason, it’s disturbing not only that we are growing more secular as a nation, but as Charles Murray has pointed out, secularism is growing more substantially among lower-income Americans.

Taken together, these trends cast a long shadow over our idea that America is the world's premier aspiration nation. America can't just be the land of opportunity for the top 20%. If hope and aspiration are largely a thing of the past for younger and poorer Americans, then it won't be long before our nation's greatest days are also a thing of the past.

Reversing these trends is perhaps the greatest calling of today's policymakers and cultural leaders. Let's hope enough of them heed the call before it's too late.

A growing class divide in America is a bigger threat than we may realize

Ryan Streeter
Follow Ryan on Twitter

America's working class is quickly going the way of yesterday's welfare class, and we hardly talk about it. In my monthly Indianapolis Star column, I highlight Charles Murray's new research showing the profound, and disquieting, trends that now define America's working class white population. 

The main points are these:

• Marriage is crumbling in the working class. In the 1960s, working class and upper middle class people married at high rates (in the mid to high 80% range). Now less than half of working class people marry.

• Unwed childbearing is taking over the working class. Half of births in the working class are now to unmarried women, whereas only 6% were 40 years ago. The percentage is still down around the 6% range for upper middle class women.

• Irreligiosity is on the rise. America is growing more secular overall, but moreso among working class people.

• Industriousness is declining. The ratio of working age men who are detached from the labor force is on the rise. This was a trend before the recession and was happening even in parts of the labor market that were booming.

• Rising crime hit the working class hard. Upper middle class people have experienced virtually no increase in crime rates and victimization over the years. The spike in crime in the post-1960s era hit the lower and working classes especially hard.

Our prevailing notions of "the working class" are practically the reverse of reality today. The solutions to these trends lie far beyond any neat and tidy policy proposal. We are in the midst of a long cultural transition that will be primarily addressed through cultural sources in civil society, our educational institutions, and even the media.

The first step is to raise awareness of just how different America has become in our lifetime.

The whole column is here.

What They're Saying: GOP freshmen remain disappointed, yet unsurprised, by the President's "hollow" attempt at a fiscal policy "do over"

Natalie Gonnella

With little substance in the President's deficit speech aside from a poorly disguised "hyper-partisan" attack on Paul Ryan's budget proposal, it’s not surprising that GOP freshmen were more than a little perturbed by the Administration's fiscal strategy "redo".

Although most appreciated the President's new found concern for the country's deficit crisis, when it came to his overall message, Washington's newest Republicans were less than impressed by his "hollow" regurgitation of irresponsible rhetoric (tax hikes, spending increases).

As ConHome’s Ryan Streeter noted in his analysis of the President’s speech:

Claiming to get serious about the deficit, and then showing that you aren’t very serious, is a pretty bad way to try winning a fight. But it’s a good way to keep pumping adrenaline into the Republican body.

And GOP newbies appear plenty energized by the President Obama's absurd attempt at a deficit reduction proposal.

With unified statements stressing both their support for Paul Ryan’s “Pathway to Prosperity,” and their continued disappointment over the Administration’s penchant for scare mongering, deficient details and partisan games, here’s a look at what a number of GOP freshmen had to say in response to the President’s fiscal “do over”:

Senator Roy Blunt:

Once again…President Obama delivered another speech that was good on rhetoric, but short on details. And for the families and job creators who are struggling to make ends meet, the President’s plan to raise taxes is simply the wrong approach. This plan puts us exactly where we were two years ago today. Small business owners still don't know what tax structure they'll face in the very near future, which is creating greater uncertainty for the future of our economy. Unfortunately, President Obama’s plan, as he said during the campaign, ‘spread the wealth’ would punish the very small businesses that fuel our economy. Washington has to do better. The President needs to lead. We need to do the right things, and do them now.

Congressman Sean Duffy:

We cannot tax and spend our way to a growing economy, sustainable jobs or a prosperous future. Government can’t create wealth, it only spends it. Wealth is created when the private sector is encouraged and empowered to invest; simply doubling down on the failed status quo and promising tax hikes on job creators is not the answer, unfortunately that’s all we heard from the President today.

Senator Mike Lee:

What the President calls ‘savings’ won’t scratch the surface of our annual deficit and, without a plan to balance the budget, the President continues to increase the national debt to unfathomable and irresponsible levels, which threatens our future prosperity...The President completely ignores Social Security’s contribution to the deficit in the coming years. Most disappointing is that the President no longer believes tax relief is important to protect our economic recovery...This is not just a political flip-flop.  It’s a reversal that will create greater instability in our economy and threaten to turn around the small gains we’ve made in employment...His speech today shows he is simply not serious about real deficit reduction.

Senator Marco Rubio:

Today’s speech by the President on this issue is a welcome development. But with all due respect, some of his ideas would take us in the wrong direction. As we prepare to have a debate on our economy in general and our debt in specific, we should be guided by three key principles. First, we have to create jobs. We have to grow our economy. We cannot do anything that would scare job creators and keep them from creating jobs...Second, we need to takes steps now to save Medicare and invest in our national security...And third, we must undertake reforms that show we are serious about solving our dangerous debt problem...America is still the greatest country in the world. But it won’t be for much longer if we don’t solve the debt problem we have. And we are running out of time to act. 

Congressman Tim Griffin:

I am glad to see the House has gotten the President's attention on the impending debt crisis and glad he has finally decided to talk about it. Unfortunately, his plan includes more out-of-control spending, tripling the debt in 10 years and job-killing tax increases. The House budget reduces spending responsibly, and saves Medicaid, Medicare and Social Security for future generations. We need bold leadership, and if the President won't lead, we will. 

Senator Rob Portman:

While I am pleased President Obama has acknowledged the budget he put forward in February failed to address the nation’s looming fiscal crisis, I continue to be disappointed by the lack of specific proposals from the President to fix our staggering debt and deficit. His budget plan was a political document that called for more spending and rejected the serious recommendations of his own Fiscal Commission, which set a deficit reduction goal of more than $4 trillion over 10 years. This goal should be the standard for any serious plan to reduce the deficit.

Congressman Larry Bucshon:

I am highly disappointed that the President’s plan to reduce the deficit is based on raising taxes on families and small businesses that create jobs and calls for yet more spending.  President Obama’s approach is full of budget gimmicks, accounting tricks, and empty promises that leads to further dependence on the federal government.  In addition, it does nothing to address the underlying cause of our current and future deficits...The status quo is irresponsible, unsustainable, and has added almost $5 trillion to the national debt under the Obama Administration. 

Congressman Mike Pompeo:

In a telling lack of leadership, President Obama back-pedalled publicly and then offered a second set of ‘solutions’ that still fail to seriously rise to our urgent financial challenges. This time, the President admonished some Americans for becoming too prosperous and quickly followed that with a proposal to raise taxes on our job creators.  The President’s re-boot of the Democrats’ failed tax-and-spend solutions would disproportionately hit small businesses thereby blunting the job creation they provide and slowing economic growth. 

Congressman Jeff Landry:

[T]he President once again used scare tactics and fear-mongering while Republicans listened to the hard-working taxpayers, delivered common-sense, responsible solutions to addressing our debt-driven economic crisis, and fought for the American people against the President’s reckless agenda that has put our future generations further in debt. We can all wonder why the President did not tackle the deficit in his first two years in office and we can all hope that change is coming. However, it is clear the President is following not leading; but following us is better than failing America.

The "purple problem," low wages, values and independent voter preferences: Republicans may be losing middle America after all - Part 2 in Ryan Streeter's 3-part series

Ryan Streeter

This is the second of a three-part series on a Republican agenda for middle America. Part 3 will run after Christmas weekend.

Yesterday, I looked at two ways that Republicans are winning in Middle America. Today I look at four ways they’re losing the middle.

Jobs and wages: Middle class wage stagnation has been around awhile, and the GOP has not put forward a plan to address it. Many smart observers have made the point for a long time that health care costs are dragging down wages, and they’re right. By fixing the tax code’s treatment of health insurance, we could free up more business revenue for wages. But beyond the health care reform implications of this view, the GOP has had little to show for an aggressive growth agenda whose primary units of measurement would be rising wages and new jobs across the broad middle of America’s income scale.

Republicans have gotten too comfortable assuming Republican support. With unemployment at 15 percent for people with anything lower than a college degree, nothing’s a given.

Values: Traditional Republican values are no longer the same things as middle class values. We once thought of Republican values as most at home in America’s middle class. Not anymore. Divorce rates and out-of-wedlock child-rearing and –bearing have skyrocketed among middle class families since the 1980s. This was brought to light recently by a report from the University of Virginia’s Brad Wilcox, which garnered a lot of public attention for documenting  this troubling trend - which the National Review’s Rich Lowry termed “social and economic evisceration of a swath of Middle America.”

The middle class is supposed to be the part of America to which you “graduate” if you’re poor but ultimately embrace work, values, and family.  Alas, the middle class has begun looking more like what conservatives used to lament as the broken society of the lower class. And no one seems to have noticed. But Wilcox’s study wasn’t the first time someone pointed this out. For instance, Kay Hymowitz noted 4 years ago in City Journal that America had formed into “two nations” in which high-earning educated women were divorcing less and less by 1990 while less-educated, lower-income women “continued on a divorce spree for another ten years.” Hymowitz’s conclusions come from a study published in 2004. This isn’t new news. Conservatives have just been quietly looking away.

Middle spectrum voters: The Republicans are losing the fastest-growing parts of the middle electorate. As Joel Kotkin noted last week on ConservativeHome, millennials and Latinos represent the most significant part of the middle that trends “progressive.” This “does not mean they will not shift center or even center-right over time but Republicans have much work to do on getting them to shift. Both groups are right now voting about two to one for Democrats.”

Republicans have shown that they can do well among Latinos, though they’ve shown they can also alienate them in a heartbeat, too. Millennials, who will constitute 1 out of every 3 voters in 10 years, are even more of a question mark for Republicans. Currently, they trend away from the GOP in a pretty serious way.

The “purple problem”: The fastest-growing states are red, but the fastest-growing sections within them may be blue. Despite the Census’s good news for Republicans this week, it may be the case that population growth in otherwise red states is driven by surging blue populations within them. I noted yesterday that states gaining congressional seats are benefitting from policies that Republicans promote. Uber-demographer Michael Barone makes a similar point.  However, as Michael Shear pointed out at the Caucus, and as Christopher Beam recounts in his post, the hidden gem for Democrats may be that the real drivers of growth favor their party.

We’ll know more about this as the Census releases more data, but the GOP should be uneasy about this. While Republican-esque policies may create environments in which people want to live, that doesn’t mean that the churning, burgeoning suburban cauldrons of diverse entrepreneurs, professionals, managers and working class families will vote red. 

The Republican party is living a paradox. On the one hand, it "owns" the middle class while the Democrats "own" the low-income and super-rich segments of the voting public. But on the other hand, the trends discussed here suggest the GOP's grip on middle America is slipping - significantly. The good news for Republicans is that the Democrats don't have much more to offer middle America than a politics of resentment. The GOP can get ahead if it starts planning now. I would argue that the 2012 presidential contender who internalizes these concerns and addresses them head-on will do well indeed.

Two policy ideas for improving the prospects of middle class families

Ryan Streeter

Middle America is up for grabs in 3 ways, which I have laid out here. The middle class, the middle of the electorate, and middle American regions, cities and towns - all of these represent fair game for both parties. The party that lays out an agenda that cuts across all three of these with a positive policy agenda will govern America for some time.

I have put forward three ideas to help middle America here. Now, I'd like to highlight a way to help the middle class, which Ramesh Ponnuru and Reihan Salam have proposed in the current National Review. Their proposal is based on the fact that a large portion of working class Americans do not have a vested interest in social welfare programs but rather value self-sufficiency and government non-interference. The two main ideas are:

• Reduce the payroll tax for middle income workers by offsetting it with reductions in the state and local tax deduction and the mortgage interest deduction - which favor more affluent taxpayers.
• Make a repeal-and-replace approach to Obamacare all about lowering health care costs for working class families, which is the same as an increase in disposable income. 

The first bullet is especially important. The debate spurred by the deficit commission in November raised the issue of tax reform - and the mortgage interest deduction in particular - in a more prominent way than we have seen in awhile. It may be difficult for people to imagine giving up their beloved deductions, but doing so would create other options that people would come to love. Using the savings generated by eliminating deductions (the mortgage interest deduction phase-out would open up $100 billion annually, for instance) to reduce the payroll tax, as Ponnuru and Salam suggest, would be an important step in showing how simplifying the tax code and providing relief to working families go hand-in-hand. Now is the time for courage on such measures.

Obamacare is a huge burden on working families. Their shoulders are ultimately where the added costs of the program lie, as rising premium costs wipe out the wage gains and jobs that in turn wipe out any purported benefits of the health care bill. Repeal-and-replace is key to increasing the economic prospects of middle class, and lower middle class, families. 

We can keep middle America competitive...in a way that favors responsible state governance

Ryan Streeter

Middle America is where the action is. Today, as we take in the new Census figures, we see that the churning middle of America is marked by population growth in areas that have favored Republicans. 

Changes reflected in the Census numbers are very much a policy story, not just a story reflecting the random wishes and preferences of millions of Americans. People move to places because of the cost of living or the favorability to business, and away from places that make life more expensive and business more difficult - and it's the policies in each place that make the place attractive or unattractive in these ways. Why else would people be leaving beautiful California in droves? It's not because California's wine suddenly got worse or its coastal vistas less appealing.

I have made this point at The American's Enterprise blog in the past by comparing California to Texas (a comparison that has become something of a sport for writers and policy wonks in the past year or so). The two largest states in America offer a compelling portrait of how policy choices, over time, can affect what we call demography. Rich people with few children and socially liberal outlooks on life are comfortable in San Francisco. Middle income couples who want to start a family and launch a new enterprise leave San Francisco and head for Texas. What we call demography follows from the policy environment in each place.

The beauty of the United States, and the envy of European countries trying in vain to replicate this dynamic on a continent with multiple languages and cultures, is that states can compete for population and business quite easily because of the lack of linguistic barriers and because of a common culture (yes, we Americans do have a culture). States will therefore be locked in a competition that is as old as the United States itself. 

But the federal government can play a role to make this competition even more lively, and if I were running for President in 2012 as a Republican, I would propose a few things to do just that. More competition among states will ultimately favor states that implement pro-business and pro-family policies - which ultimately favor Republicans.

Propose legislation that prohibits Congress from bailing out states. There is a lot of noise in the news about the rugged fiscal condition of a number of states. But this is only the beginning. If you think the debate about bailing out banks was rough, wait until we start talking about bailing out California - and don't be surprised when Congress decides to do just that. In fact, I would argue that governors and state legislators are expecting just that.  And what an insult that would be to reformers such as Mitch Daniels of Indiana or Chris Christie of New Jersey, who have staked their reputations on the ability to bring their states' fiscal houses in order.

Following from the first point, propose that the federal government withholds its subsidy to states for federally-backed bonds if a state can't service borrowing costs due to profligate spending. The bulk of states' financial predicaments results not from debt but from out-of-control spending. It's nearly criminal for them - and their bondholders - to expect the federal government to help them service their debt when they can't control their own spending.  If states know that federal subsidies end if they can't control their finances, investors in turn will adjust their behavior.

Propose a new authority for the President to spend less than Congress authorizes. This one may be complicated, but some states' governors have this authority, and it helps to control costs by conditioning funding on certain behavior. If the President were able to write down discretionary spending levels to states that were misusing the funds or using them to fill spending gaps resulting from their own profligacy, states would adjust their behavior. 

A battle is on for middle America - is the GOP ready? (No)

Ryan Streeter

The “American middle” presents some real challenges and opportunities for Republicans.  I would argue it will make or break the Republicans’ chance of becoming the dominant party over the next decade.

There are actually three American middles that will affect the future of the GOP more than the GOP seems willing to think about right now:

The middle class. Americans across the broad stretch of the income scale are not just feeling squeezed; they are squeezed. Rising health care costs and diminishing returns to education have hurt wages. Rising divorce has added not only social but also new financial strains. Changes in America’s manufacturing sector have made formerly valued professions worthless.  Unemployment is at 15% for those without college degrees. People might disagree whether the middle class is in crisis, but it’s clearly in the midst of a prolonged, difficult state. 

Republicans did well among middle class voters in November, but I think most people realize that voters could turn on a dime if their frustrations aren’t addressed.

The middle of the electorate, or independent voters. As Joel Kotkin noted this week, young voters and Latinos will present a big problem for the GOP if the party doesn’t aggressively court them, as they will both likely trend leftward if the GOP continues status quo policies. Then there’s the swelling suburban population that Kotkin notes is less and less the domain of either party. Winning these three groups (and there is some overlap between them) today could provide the base of the party of the future.

Middle America. By this I mean the non-coastal parts of the country, marked by mid-size and smaller cities rather than the traditionally large urban areas. This, as Kotkin notes, is where the most energetic growth is occurring (in economic and population terms). The GOP should aim to be the party that advocates policies most amenable to these places’ continued prosperity.

Each of these three middles presents a policy challenge to the Republican party.

Will Republican leaders take seriously the issue of wage growth among the middle class? Let’s hope so, even if I have my doubts. They can start with the few nuggets in this week’s ConservativeHome mini-symposium on the middle class.

Will Republicans develop a broad enough set of policy alternatives on immigration and economic growth to continue to make gains among Hispanics, and will they have a positive set of policies on, say, the environment to appeal to younger voters? The GOP is still very much the Party of No to these groups.

What can Republicans learn from high-growth areas? They should be modeling policy on what is succeeding right now. The GOP has a history of using states as laboratories for reform. “Growth” is a popular word these days, but it’s going to take a lot more than continuing the current tax rates to achieve. The growing regions of the country are a roadmap for the kinds of policies we need.

We will be returning to these themes regularly. A battle is on for the American middle, even if neither party has completely realized it yet.

David Brooks, Kevin Hassett, Gary Andres, Nick Schulz and Ross Douthat on what the GOP can do to improve the prospects of the middle class

Ryan Streeter

Demographer and futurist Joel Kotkin observed Monday on ConservativeHome that the “huge, mainly suburban working, middle and upper-middle class” are politically up for grabs. He says:

These include managers, store owners, lone entrepreneurs and skilled laborers in the private sector. Neither party focuses on presenting a positive vision for growth and improvement of quality of life for this segment. So people in this group shift back and forth, making havoc of the best laid plans of both parties.

This is the shifting middle of America. And many families in this group are facing grave economic stagnation compounded by social breakdown. I have talked about this problem here and here.  

The GOP does not yet have a coherent framework – rhetorically, politically, or in terms of policy – to restore middle class confidence. Or, in Kotkin’s terms, to present the middle class with a positive vision for growth.

Today, to get the discussion going, we feature a mini-symposium of some bright minds on the right, providing an answer in just a few lines apiece to the question: what should the GOP do to improve the prospects of the middle class?

The mini-symposium participants are: David Brooks, Kevin Hassett, Gary Andres, Nick Schulz, and Ross Douthat.

David Brooks

Columnist, New York Times

The most fundamental threat to the middle class is the stagnation of human capital. Graduation rates from college have been flat for a generation. Single parenthood is skyrocketing, among all races and ethnic groups. Social trust is breaking down.

There's no one solution. Building human capital is like nutrition. You have to do it in different ways every day. It starts with better early childhood education, the single most effective investment. It shouldn't be state run, but where applicable it should be state funded. Then there are mentorship programs to support students through college. Job training programs should be turned into voucher programs. Perhaps no job training programs work in the end, but the workers themselves should at least be in control. There should also be social entrepreneurship funds - locally-controlled pots of money to support secular and faith-based groups. 

Basically, people have to grow up in dense communities, with a thousand influences pointing them in the right direction, from conception onward.

Kevin Hassett

Director of Economic Studies, American Enterprise Institute

The most important thing that the GOP can do to help the middle class is cut the corporate tax rate. When Japan cuts its rate next year, we will stand out as the highest corporate tax country on earth. That encourages firms to locate plants in lower tax countries, and depresses jobs here at home. The impact of tax minimization by multinationals is so dramatic that there is a clear Laffer curve in the international corporate tax data. Higher tax rates depress revenue because it is so easy to transfer price profits into low tax jurisdictions.

This tax game has a terrible impact on blue collar workers.  My colleague Aparna Mathur and I studied many years of data, and found a very strong link between corporate tax rates and wages.  Low tax countries attract capital, and that capital increases the productivity of workers and their take home pay.

Earth to Washington: If you want to see higher job creation, cut what is soon to be the highest tax on earth.

Gary Andres

The Weekly Standard & Dutko Worldwide

Middle class Americans suffer due to a federal government that can’t take its hands off the wheel of power.  When Washington gets too big and demanding, it squelches creativity, burdens entrepreneurs – and disadvantages workers.

Education and training programs are a great example.  Republicans could champion the middle class by providing governors more flexibility to use Pell grants for shorter-term vocational programs.  Current rules are too rigid, aimed more at providing educational institutions money, not middle class job skills.

Giving states the authority to experiment with health insurance alternatives is another example. Obamacare’s one size fits all approach will ultimately hurt the middle class.

Finally, promoting pro-growth policies like lower taxes on business and more free trade agreements will create an environment where middle class job creation can flourish.

The best way to help the middle class is through a smaller, more flexible federal government – one that creates an environment for opportunity, not a Washington-based scheme to get there.

Nick Schulz

Editor-in-Chief, The American

The middle class needs two things -- rising economic growth and stable families. There is little policy can do to help the weakness of the family in the short run. How about growth? New firm formation is indispensible to economic growth. To get more of it, the GOP should make young firms exempt from payroll taxes.

We featured an interview last month with New York Times columnist Ross Douthat, in which he addressed the issue of how to strengthen the middle class. With his permission, we summarize his remarks here:

First, a reform of the health care reform that moves us in a more market-friendly direction than Obamacare, but also creates some kind of a tax credit/deduction for people who don't get insurance
through their employer and can't afford it on the individual market. This is something the Republican leadership hasn't been willing to embrace, but it's a necessity to make the health care system fair and equitable.

Second, a comprehensive tax reform along the lines that Ramesh Ponnuru and Robert Stein have proposed, which lowers rates and curbs deductions (something most conservatives favor) but also makes the tax code more family friendly, through a larger child tax credit (something some conservatives are still skeptical of).

Finally, a broad move toward greater competition in the public education system, both in the context of K-12 education, and in public colleges and universities as well. Here's there's increasingly a bipartisan consensus on the value of choice and competition: What's needed is the political will to fight a long war of attrition to reform the public-school bureaucracy. 

Middle class marriage in crisis: wrapping up today's coverage of the issue

Ryan Streeter

Someone must have foreordained today as "Brad Wilcox's Wake-Up Call about Middle America's Crisis" Day.

Not only did Brad write on Platform today about his new study on marriage breakdown in the middle class, he was interviewed by Kathryn Jean Lopez at NRO and his study on middle class marriage breakdown was the subject of Rich Lowry's column. In addition John McCormack featured Lowry's take on the study at Today's Standard. I covered the issue here. We all have Ross Douthat to thank for drawing attention to this early in the week.

Here's a recap of some of the more salient clips from today:

• Wilcox on Platform: "Up until the 1970s, marriage had a strong hold over both Middle and upscale America. But over the last four decades, dramatic changes in the economic, cultural, and civic fabric of the United States have eroded the strength of Middle American ties to marriage; by contrast, the ties that upscale Americans enjoy to marriage have remained resilient in the face of these changes."
• Wilcox in Lopez's NRO interview: "[W]e are witnessing a striking reversal in American life where highly educated Americans are more likely to be connected to the religious and moral sources of a strong marriage culture than their fellow citizens from middle America...Indeed, the biggest marriage story among ordinary Americans is that cohabitation is mounting a major challenge to marriage as the preferred site for childbearing and co-residence in Middle America...This is disturbing because children and cohabitation do not mix. Children born to cohabiting parents are at least twice as likely to see their parents break up before they turn five, and they are much more likely to suffer educational and emotional problems, compared to children born into married homes."
• Lowry: "All of this points to a slow-motion social and economic evisceration of a swath of Middle America...At the moment, American politics offers two separate, distinct ways not to address these issues: Either the brain-dead populism of the Left that blames it all on trade and the decline of unions, or the brain-dead populism of the Right that extols the working class without taking serious note of its agony. We’ll have to do better: There’s a crisis in the middle."
• McCormack sums up the issue by quoting Indiana congressman Mike Pence: "'You would not be able to print enough money in a thousand years to pay for the government you would need if the traditional family continues to collapse.' This new study seems to prove Pence's point: Where the family fails, the state grows."

The left is philosophically incapable of addressing this issue. The options available to conservatives aren't great, but they should be thinking hard about how we confront this problem. It's real, it's severe, and nothing will have a greater effect on inequality between the rich and everyone else a generation from now.